7 Reasons Why You Should Establish Credit While You Are In College

Posted April 27, 2015 by
Smiling college student with credit card and laptop

Smiling college student with credit card and laptop. Photo courtesy of Shutterstock.

One of the rites of passage for college students is obtaining credit cards and beginning to establish their financial history. For some, the availability of new credit is an opportunity for expenditures that are out of reach, but for others it presents the valuable chance to establish their credit for the future.

If you are wondering if it is worth it to apply for a credit card or other type of financing arrangement, there are some good reasons to do so that have nothing to do with a shopping excursion or spring vacation. Credit card companies are willing to take a chance on college students even without a credit history, and you should take advantage of the opportunity to establish your credit even before you apply for your first job.

1. Establish Your Credit History

Establishing your credit history is an important step in the modern world of credit checks, and the widespread use of credit scores to reflect your character and financial decision-making. Without some type of credit usage and payment history, the ratings agencies will not be able to use their formulas to determine a score, leaving lenders with no basis for deciding to extend you credit in the future.

2. Higher Credit Score

By establishing your credit through charging small amounts on a credit card and then making payments on time, you will quickly improve your credit score, which is actually based on positive credit activity. Your credit score will be an important financial benchmark throughout your life for obtaining loans, leases and even employment.

3. Interest Rates

If you have a high credit score, you will find that both car loans and home loans are easier to obtain, and that the lenders will give you a lower interest rate. This alone can save you thousands of dollars on interest charges over the years of repayment.

4. Qualifying For an Apartment Rental

Many apartment leases require a credit check and good credit rating, and a higher score can help you qualify for the lease as well as give you room to negotiate for a lower security deposit.

5. Employment Credit Checks

Employers are increasingly turning to credit checks for prospective job candidates, with the opinion that a high credit score reflects sound character and responsible decision making with personal finances. Both of these traits are valuable in an employee, and a low credit score or history of missed payments can raise questions of reliability.

6. Availability of Credit cards and Lower Rates

Those with high credit scores receive frequent credit card offers, often with very low rates and promotional benefits for the new account holder. The only caution is not to accept every offer, which could have a negative affect on the credit score due to high revolving credit limits.

7. Eligibility for Business Loans

If you are planning on starting a business, then lenders may look to your personal credit history to gauge the probability of repayment. Often, this is the only way for young entrepreneurs to start their own business, and so the credit score can be a pivotal element.


Even if you are not interested in having a credit card for personal use, there are many good reasons to accept one or two credit card offers while still in college. By using the card occasionally you will be on the road to establishing your credit history, and along with it a high credit score that can be a real attribute in the modern world.

Mr. Alan Crinston is a financial blogger and advisor at creditprofessor.org. Follow his articles for more personal finance advice.

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